Saudi non-oil private sector shows burst of growth in December: PMI

DUBAI: Saudi Arabia's non-oil private sector expanded for the fourth straight month in December as economic activity in the kingdom rebounds from the impact of the COVID-19 pandemic, a survey showed on Tuesday.

The seasonally adjusted IHS Markit Saudi Arabia Purchasing Managers' Index (PMI) rose to 57.0 in December from 54.7 in November. The 50.0 mark separates growth from contraction.

The improvement in business conditions was the strongest in 13 months, with output and new orders expanding at the sharpest rates seen during 2020 supported by stronger domestic demand and price discounts at some companies.


The Saudi economy suffered a major setback last year due to the coronavirus crisis and lower oil prices, but recent data showed the economy shrank more slowly in the third quarter as the government eased some coronavirus restrictions.

"According to respondents, business activity has been helped by falling COVID-19 case numbers in the fourth quarter of 2020, despite other major economies suffering a 'second wave'," said David Owen, economist at IHS Markit.

"The roll-out of a vaccine meanwhile led to increased optimism that demand will strengthen over the coming year."

The expansion of the private sector is at the centre of Saudi economic reforms aimed at creating jobs while weaning the world's largest oil exporter off its dependence on crude.

"On the negative side, the latest expansion did not support a rise in job numbers during December," said Owen.

"In fact, employment fell slightly as firms diverted spending towards inputs and noted that current capacity still allowed them to clear both new and outstanding work."